If you do not want to install test modules and themes, set following to FALSE

$settings['extension_discovery_scan_tests'] = TRUE;

Open development.services.yml in the sites folder and add the following block (to disable twig cache)

parameters:
twig.config:
debug : true
auto_reload: true
cache: false

I double and triple checked, all changes have been correctly applied per the above. But nothing has changed, I still need to rebuild cache every time I make a change to a template file for it to show up in the front end.

So, what are the correct steps to disable Twig caching on a stock installation of Drupal 8.0.1, with no contrib or custom modules installed?

This question appears to be off-topic. The users who voted to close gave this specific reason:

"This question was caused by a problem that can no longer be reproduced, was solved by a cache clear, or was a simple typographical error. While similar questions may be on-topic here, this one was resolved in a manner unlikely to help future readers." – Clive

Have you checked performance settings? There was caching enabled on my installation per default...
– VolkerDec 17 '15 at 12:09

Thanks @Volker, that's the first place I checked - aggregation was turned on but caching was and is turned off (agg is now off too and caches have been rebuilt)
– Clive♦Dec 17 '15 at 12:18

1

I am not 100% sure it will help in this situation, but also make sure your local APC or OpCache is disabled, or set to rescan every time.
– mpdonadio♦Dec 17 '15 at 13:49

Weird, this should definitely work. First thing is to figure out which cache it is exactly. You mentioned template change, if you change something in a hook_*_view() or other place in PHP that's just render cached, does that get updated? Try dumping the actual settings in your compiled container with drush ev "var_dump(\Drupal::getContainer()->getParameter('twig.config'))". Make sure that the order of your services.yml includes is correct.
– BerdirDec 17 '15 at 21:17

@Berdir Turned out to be something waaaay down the pipeline that was causing the problem, the docs are spot on
– Clive♦Dec 22 '15 at 15:08

I'd rather keep my development settings in the recommended place, development.services.yml, which is included by my sites/default/local.settings.php (which is in turn included in the normal settings.php). Are you saying that's not possible and I should use the production settings file instead for this? Changing auto_reload didn't make a difference unfortunately
– Clive♦Dec 17 '15 at 13:00

Just tried copying default.services.tml to services.yml, made the changes you suggested, rebuilt cache - no difference, still have to rebuild cache every time I make a change to a twig template for it to show up. Thanks anyway
– Clive♦Dec 17 '15 at 13:04

I've done this dozens of time, switching twig debug on and off, never had any problems, this is very strange. Do you see the debug comments, when viewing the source in the browser? (and see the answer for additional information)
– 4k4Dec 17 '15 at 13:22

It is strange @4k4 :) I've done this before and not had a problem too, not sure why it's suddenly started on this site. Just in a meeting but will try your other suggestions a bit later
– Clive♦Dec 17 '15 at 13:37

The problem turned out to be a combination of things on my local machine that were hiding the real issue. Sorry for wasting your time, thanks again for the response
– Clive♦Dec 22 '15 at 15:07